By Rishikesha T. Krishnan & Srivardhini K. Jha
Ever since the Covid-19 pandemic hit the world a few months ago, we have seen a flurry of innovation efforts. From academic institutions to government laboratories to startups to established companies, people have been trying hard to do their bit to address the new challenges posed by the pandemic. What can we learn from all these innovation efforts?
Here are six takeaways:
1. In the past organisations may have looked at adjacencies too narrowly
Who would imagine that a mature automobile company like Mahindra with no presence or prior experience in making medical equipment would be able to make ventilators in a matter of weeks? Or, that they would even contemplate doing so?
Most organisations look for strategic alignment in the innovation projects they start. Such strategic alignment is typically driven by product-market fit. In “normal” times, we would imagine a Mahindra dismissing out of hand the possibility of making ventilators, on the grounds that it clearly looks like an unrelated product.
But, both in India and the US, the government reached out to automotive companies to make ventilators on the grounds that their manufacture involved complex and high-precision assembly operations, and companies not only accepted the challenge but delivered as well.
Perhaps this is not surprising if we use the lens of the “resource-based view of the firm” that postulates that successful strategies are based on “difficult-to-imitate” resources that allow the company to provide superior value to customers. Recall that CK Prahalad and Gary Hamel argued that such resource-based core competencies provide the best basis for diversification. Of course, there is an advantage of emergency situations which may not extend to “normal” times—for example, go-to-market is much easier when there are emergency procurement policies in place. But, even granting this, it is clear that organisations have broader innovation capabilities than they think.
A Bangalore-based startup, Eyestem, shows how creative thinking can help redefine adjacencies to solve important problems. Eyestem’s mission is to develop scalable cell replacement therapies using its deep expertise in stem cells. After the Covid-19 pandemic started, Eyestem’s founders saw that there is great urgency to find drugs that can cure or slow down the spread of Covid-19, and for this companies are trying to repurpose existing drugs. They realised that they could support this endeavour by leveraging their expertise in stem cell therapies for the lungs to create an anti-Covid-19 screening platform that would be valuable in determining the efficacy of potential cures or vaccines.
2. Organisations have great potential for innovation, and focusing attention and resources really helps.
Mahindra is not the only mature company that has shown the ability to move fast to address Covid-19-related challenges. Maruti, BEL and Reliance are other large Indian companies that have displayed similar agility. Startups have not been far behind. A less known startup like Pune-based Mylab Discovery Solutions became the first Indian company to bring an approved and certified PCR-based (polymerase chain reaction-based) kit for the detection of coronavirus to the market.
Clearly, in an emergency situation, organisations across the spectrum have been able to get their act together, focus, and solve tough problems quickly. This makes you wonder—why are they unable to muster even a fraction of this ability in normal times? Why are delays in getting to market such a tricky problem to overcome for many companies?
Prior research suggests that companies are constantly struggling to get to market quickly enough for a variety of reasons—lack of focus; inadequate resources invested; resources sprinkled over too many projects leading to delays across the board; failure to experiment quickly enough; or decision-making simply getting stymied by analysis paralysis.
The Covid-19 experience is thus reinforcing something we know—focusing attention and resources really helps. What does this mean in practice? Perhaps that we remember some lessons from one of the masters of innovation. When Steve Jobs returned to Apple in July 1997, one of his first major decisions was to stop most of the projects that were on and to focus attention on one or two really critical ones like the iMAC. This was his philosophy later as well—to ensure that organisational and managerial attention was focused on the one or two products that were really important at that point of time (iPod, iPhone, iPad, etc.) so that they got the attention they deserved, resulting in highly differentiated products launched on time.
In an emergency situation, needs stare us in the face making focus relatively easy to achieve. For instance, the need for ventilators was identified as important quite early after the pandemic struck. But in “normal” times the ability to focus requires managerial conviction. Such conviction is easier to develop when decision-makers are immersed in users’ lives rather than cocooned in corner offices. And, in today’s data-driven digital world, conviction is facilitated by using the results of data analytics, as so eloquently presented by Tom Davenport and Jeanne Harris in their book Competing on Analytics.
3. No effort at innovation goes to waste as long as you can learn from it and build on that learning. And, new technologies like AI are providing powerful tools for such learning.
The importance of failure in innovation is well-documented—remember that the “weak” adhesive which enabled 3M’s blockbuster Post-It Notes was a failed “strong” adhesive. And, particularly in the drug industry, there is tremendous scope for repurposing drugs that were either not good enough or had bad side effects in an earlier context. HCQ (anti-malarial), Famocid (an early antacid since replaced by much better ones), Remdesivir (failed to cure hepatitis and Ebola) and even the infamous thalidomide (associated with birth defects when it was used to combat morning sickness during pregnancy) are all today candidate molecules in the hunt for Covid-19 cures. While there have been no big successes so far, Remdesivir has been associated with shortening the cycle of the disease indicating that though we don’t have a cure yet, a cure is indeed possible.
New methods of invention and discovery are helping delve into the treasure trove of earlier innovation attempts in a much more effective way. BenevolentAI, a UK-based startup, has used its AI-based platform to sift information from volumes of scientific literature to identify baricitinib, a drug originally developed to cure rheumatoid arthritis, as a strong candidate to prevent the coronavirus from entering human cells. This use of AI as a method of invention was highlighted by IM Cockburn, R Henderson and S Stern in their recent US National Bureau of Economic Research (NBER) paper titled ‘The Impact of Artificial Intelligence on Innovation: An Exploratory Analysis’, and is an increasingly powerful tool.
While on the subject of the role of AI in innovation, it’s useful to note a recent development in the protection of intellectual property. The US Patent and Trademark Office (US PTO) refused to recognise a machine as an inventor and grant a patent to it. This is unlikely to be the end of this story, but at least for now, while machines can play an important role in the innovation process as in the example above, they won’t be recognised as inventors in the legal domain. So, companies using AI engines can be confident that the benefits of the engine won’t be taken away by a machine!
4. Innovation in product is not enough; innovation has to happen across the value chain.
At the beginning of the Covid-19 crisis, India was dependent on China for testing swabs. Each swab cost Rs 17 and supply was unreliable. The government identified Johnson & Johnson (which makes ear buds in Vasai, on the outskirts of Mumbai) as a potential domestic source for swabs, but preferred the use of polyester staple fibre (PSF) to cotton on the swab. Reliance, India’s largest manufacturer of PSF, stepped in to supply this raw material, but the standard length of the slivers supplied weren’t compatible with J&J’s machines. Reliance had to modify its process overnight to produce PSF slivers of shorter length that could be used on J&J’s machines. Innovation in sourcing, material, process and product finally resulted in a locally-made testing swab that cost less than Rs. 2.
In a fast-changing problem space like that related to the coronavirus, companies need to be creative in the testing process as well. We mentioned earlier the example of Eyestem which is creating a powerful stem cell platform to test Covid-19 drug candidates and vaccines. We came across a company in the disinfectant space which is unable to test its solutions on surfaces infected by the coronavirus due to lack of access to the virus strains, and is hence testing them on viruses with similar characteristics in the interim on the assumption that if it works on one RNA-enveloped virus, it will work on another.
This reinforces the argument advanced by firms like Doblin (now a part of Deloitte) that a new product needs to be accompanied by innovation in several other dimensions (such as process, business model and the delivery system) for it to be successful. All the more when the environment is changing in fast and unpredictable ways.
5. Collaboration and open innovation are even more valuable than before, particularly to appropriate the value out of innovation.
Mylab hit the headlines in India for being the first company to offer an ICMR-certified PCR-based test kit to check for the coronavirus. Yet, Mylab was able to exploit the real potential of its product only when the Serum Institute, India’s largest vaccine manufacturer and also one of the largest in the world, became its strategic partner. One of Serum Institute’s distinctive advantages is scale—that is why it is part of multiple global initiatives to produce vaccines against the coronavirus. Adar Poonawalla, CEO of the Serum Institute, quickly helped Mylab tie up with biopharma major Syngene to ensure that some of the critical inputs to the product are readily available indigenously. All this happened within the space of two weeks. Coupled with Mylab’s expansion of its own capacity, this enabled it to expand production of testing kits to 200,000 per day by the middle of May 2020.
Similarly, AgVa Healthcare, a Delhi-NCR-based producer of innovative low-cost ventilators, was able to scale-up manufacture of ventilators to 10,000 units a month thanks to a tie-up with Maruti Suzuki, India’s largest manufacturer of passenger cars. Without this scale, AgVa would be unable to fully exploit its innovative design.
Historically, firms in India have not leveraged the power of collaboration and partnerships. Some years ago, while reviewing biotech firms in India, Nature Biotechnology was surprised to find a much lower level of alliances among Indian companies compared to their peers. It is good to see that changing now and changing fast!
6. You need a supportive innovation ecosystem. New initiatives are emerging to build one in India.
The innovation management literature stresses the importance of a vibrant system of innovation that facilitates a free flow of knowledge, technology and resources between academia, industry and the government. There are several examples of strong ecosystems enabling the creation of innovation clusters—the high-tech innovation cluster in Silicon Valley and the biopharma cluster in Boston being the notable ones. Inspired by these clusters, national and state governments across the world have tried to seed innovation clusters in their own geographies but have had mixed outcomes. One reason for this is that the emergence of an innovation cluster is path dependent and an offshoot of idiosyncratic events. Perhaps, an event such as the Covid-19 pandemic is just the trigger needed to coalesce a strong innovation system.
Interestingly, we are starting to see some movement in this direction in India. The Indian government has taken a systems view of innovation during the pandemic. It has moved quickly to secure and protect the availability of a variety of candidate drugs (HCQ, famocid) as reports have emerged about their possible role as cures. Through the office of the Principal Scientific Advisor, it has supported multiple and diverse initiatives across industry and academia to develop and produce diagnostic kits, personal protection equipment, sanitisers and ventilators. It has played the role of catalyst in many of the examples we have described above like creating capacity for testing swabs and scaling up ventilator production.
For example, to leverage the capabilities in diagnostics available in India, the government think-tank NITI Aayog has launched Project CARD (Consortium for Affordable and Rapid Diagnostics). This platform aims to “synchronise all stakeholders for a common, urgent goal towards accelerating Covid-19 diagnostics in India.” This project has a specific goal of creating capacity for 10 million antibody-based Covid-19 tests by July 2020. CARD will be a useful trial for the more comprehensive National Biomedical Research Indigenisation Consortium (N-BRIC) which covers all the essential inputs to the diagnostics process.
Apart from government initiatives, we also need influential individuals to become “category champions” and catalyse innovations in specific areas. Bill Gates is a fine example of a category champion, having committed billions of dollars to global health. He has now publicly committed to investing upfront in creating manufacturing scale for the most promising Covid-19 vaccine candidates so that whichever candidate passes trials first can be put into production without any delay. While we have heard of companies trying alternative routes in parallel to speed up the innovation process, the category champion brings a whole new paradigm to taking an innovative product to market and thereby strengthen the innovation ecosystem.
These system-enhancing moves bode well for startups and will hopefully inspire them to take on the most challenging problems and address them with audacious ideas, secure in the confidence that diverse forms of support will be available.
We also hope that this proactive, system-based approach to innovation will extend to other sectors as India rebuilds its economy post-Covid-19.
(Srivardhini Jha is associate professor, entrepreneurship, at IIM -Bangalore. Her research interest is in innovation and entrepreneurship in the emerging country context.)